Haldex has announced it will streamline its production in Europe by concentrating the production of EBS and air suspension products in Hungary. As a result, Haldex’s factory in Heidelberg, Germany, will be shut down.
According to the company, Haldex’s European region has not managed to increase profitability to a level that meets the expectations. The expected economic downturn and the cost level in Germany has resulted in the decision to move the production. Through co-locating the production in Heidelberg with the production in Szentlörincskáta in Hungary, economies of scale can be reached to the point that production costs will decrease.
In total, 100 people are affected by the shutdown. Out of these, 17 employees will remain at Haldex since they possess regional and global positions located in Germany. The notices will be distributed successively throughout 2020.
Negotiations with the trade union association was initiated this week and are expected to be completed in 2019. The costs of the move are difficult to predict as the levels of compensation are part of the negotiations that have just been initiated. When the negotiations are completed, Haldex will announce the estimated costs. The costs will affect the financial result as a non-recurring expense, most probably in the fourth quarter of 2019. The move is expected to be completed during the first half of 2020.
Earlier in October, Haldex announced a similar co-location, moving production from North America to Mexico. Haldex aims at reaching an operating margin of 10 percent by 2022, excluding investments in new technology. With these changes in production structure, the savings are estimated to a total of 75 million SEK annually (roughly $7.8 million USD), after they have been fully implemented.
